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Australia's central bank will probably leave its benchmark interest rate at a 12-year high as it assesses whether the economy is slowing enough to cool the fastest inflation in almost two decades.

Governor Glenn Stevens will keep the overnight cash rate target at 7.25 percent tomorrow in Sydney, according to all 25 economists surveyed by Bloomberg News. Six say the bank will raise the rate by the end of the year, and one forecasts a cut.

Slumping stock markets, record gasoline prices and rising borrowing costs have slashed consumer confidence and forced companies to trim spending and fire workers. Policy makers said a month ago it “was important for the slowing trend to continue'' in Australia's $1 trillion economy, which grew in the first quarter at the weakest pace in almost two years.

“The bank should be starting to feel a bit more confident that the demand slowdown they're looking for is on track,'' said Shane Oliver, chief economist at AMP Capital Investors in Sydney. “That will head off the need for another rate hike, regardless of the short-term threat to inflation coming from gasoline.''

The central bank has left borrowing costs unchanged since March, when it raised the benchmark rate by a quarter point for the fourth time in seven months.

The bank's board will announce its July decision at 2:30 p.m. in Sydney tomorrow.

The Australian dollar traded today near its highest in 25 years as prices of commodities the nation exports, from iron ore to coal, rose to records. The currency rose to 96.25 U.S. cents at 10:38 a.m. in Sydney from 96.20 cents late on June 27.

Global View

Australia's current interest rates “are essential'' to restrain inflation, which poses a greater threat to the economy than the global credit crunch, Stevens said on June 13.

Monetary policy needs to damp domestic demand “because inflation has already picked up,'' he said.

Steven's concern about accelerating inflation is being echoed by central banks around the world easy payday loans. The U.S. Federal Reserve kept its benchmark rate at 2 percent last week and warned faster inflation may accompany some strengthening of the economy. European Central Bank President Jean-Claude Trichet has left open the option of raising interest rates after July.

Surging fuel, food and housing costs pushed Australia's annual core inflation to 4.4 percent in the first quarter, the highest rate in almost 17 years. The central bank aims to keep price increases between 2 percent and 3 percent on average.

Building Approvals

Reports published since the bank's last meeting support Steven's view that the economy is slowing. Employment fell in May for the first time in 18 months, ending the longest run of monthly job gains since 1978, consumer confidence dropped in June and businesses remained pessimistic for a fifth consecutive month.

Home-building approvals probably fell 3.4 percent in May, the fourth decline this year, according to the median estimate of 24 economists surveyed by Bloomberg. A separate report may show retail sales rose 0.1 percent. The housing and retail sales figures will be published on July 2.

Consumer and investor sentiment is also being battered by crude oil prices, which hit a record $142.99 a barrel last week, and tumbling stock markets.

Australia's benchmark S&P/ASX 200 Index has slumped 16 percent this year, and the Dow Jones Industrial Average had its worst June since the Great Depression.

“The Reserve Bank can be a little more confident'' that this year's interest-rate increases are working, said Matthew Johnson, an economist at ICAP Australia Ltd. in Sydney. “They know inflation is going to be high for a while, but their emphasis will be making sure this growth slowdown sticks.''

Bloomberg Survey

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Estonian consumer confidence rose in June from its lowest level in more than four years on improving expectations about state and personal finances, indicating the Baltic economy may avoid a recession.

The consumer confidence index rose to minus 16 from minus 19 in May, the lowest since December 2003, the Tallinn-based Konjunktuuriinstituut said today on its Web site.

Confidence of Estonian consumers, boosted by entry into the European Union in 2004, has slid after hitting record highs in January 2007 as the country's property sector cooled, banks set stricter lending terms to avoid overheating and inflation accelerated cash advance in one hour.

Rising investments may signal the Baltic economy is turning around after its economic expansion almost stalled in the first quarter to 0.1 percent, the weakest in the European Union, Maris Lauri, chief macro analyst with Hansabank Markets in Tallinn, said earlier this month.

Copenhagen-based Danske Bank A/S and London-based Capital Economics Ltd. forecast a full-year contraction this year after 7.1 percent growth in 2007.

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Rising mortgage rates are driving up the cost of buying a house even as prices fall, making property more expensive across the U.S., according to a new study by Zillow.com, an online provider of home valuations.

Monthly payments on 30-year fixed mortgages are 6 percent to 10 percent higher in 41 of the top U.S. housing markets than they were two months ago. First-quarter prices have declined from a year earlier in 88 percent of those areas, Zillow said.

“We're going to need about a 30 percent decline in house prices if you are going to keep payments stable,'' said Morris Davis, a former senior economist with the Federal Reserve and now a real estate professor at the University of Wisconsin-Madison's School of Business.

Seven Federal Reserve benchmark cuts since September have failed to lower mortgage rates as banks have curtailed lending after taking writedowns or credit losses of more than $400 billion from investments in mortgages. Rates for 30-year fixed-rate home loans were about 6.3 percent when the Fed first reduced its target federal funds rate nine months ago. They're now just under 6.45 percent, data from Bankrate.com show.

Zillow based its calculations on almost 25,000 mortgage offers to potential homebuyers with credit ratings of at least 680 out of a possible 850. The would-be buyers sought bids through Zillow's Mortgage Marketplace, a new service that helps consumers shop for home loans. Zillow's main business provides U.S. home valuation estimates based partly on sales data.

`Unfortunate Pickle'

The average monthly mortgage payment rose $131, or $1,572 a year, since the beginning of April in the 41 areas surveyed, Zillow said. The figure is controlled for population.

“The story here is not so much how much more it will cost you over the life of the loan, but how much less house you can buy,'' said Greg Rand, managing partner of Prudential Rand Realty in Westchester County, New York. “It's an unfortunate pickle that we're in.''

Prudential Rand has more than 700 sales associates and a mortgage brokerage that arranges financing.

Home prices in 20 U.S. metropolitan areas fell in April by the most on record, according to the S&P/Case-Shiller home price index, and new home sales declined 40 percent in May from a year ago, according to the U.S. Census Bureau. Sales of previously owned homes in the U.S. rose in May from the lowest level in at least nine years as a slide in prices lured some buyers into the market, the National Association of Realtors said yesterday.

Fed Actions

U.S. housing was less affordable in April than the previous month even as sales increased in some markets, the Realtors data show. The composite homebuyer index fell to 129.8 in April from 130.6 in March. A value of 100 means that a family with the national median income has exactly enough income to qualify for a mortgage on a median-priced home.

Fed rate reductions have historically lowered mortgage rates. From Jan. 3, 2001, to June 25, 2003, the Fed cut rates 13 times. Mortgage costs fell eight times and rose five times, according to North Palm Beach, Florida-based Bankrate.com.

Changes in mortgage rates have the biggest impact when those rates are near the historic lows they are now, Davis said. If interest rates were at 1 percent and rose to 2 percent, house prices would have to drop 50 percent to keep a buyer's house payment the same electronic check payday advance.

Mortgage payments rose the most in the California metropolitan areas of Ventura and Santa Rosa, gaining 10 percent, according to Zillow. That added $220 a month to loan payments in Ventura and $189 in Santa Rosa. Home prices in those areas fell about 20 percent in the first quarter from a year earlier, the company said.

Higher Payments

The annual cost for a 30-year fixed-rate mortgage to buyers with good credit in the Ventura area is now $2,640 more now than 60 days ago. That amounts to $79,200 more over the life of the loan, without adjusting for inflation, Zillow said.

The trend holds true in California metro areas including Sacramento, San Francisco, Los Angeles, San Jose and San Diego, where mortgage payments on median priced homes range from 7 percent to 10 percent more now than in April.

California is among the states hardest hit by the biggest drop in U.S. home sales in 26 years. One in every 183 households in the state was in some stage of foreclosure in May, more than double the national average, according to Irvine, California-based RealtyTrac Inc.

Sales Gain

Foreclosures drive down prices by contributing to the higher inventory of unsold homes, forcing prices lower and reducing home equity, said Ryan Ratcliff, an economist with the UCLA Anderson Forecast in Los Angeles.

Home sales in California rose 18 percent and exceeded an annualized, seasonally adjusted rate of 400,000 last month for the first time since early 2007, the state Realtors Association said in a news release on June 25. The increase in sales volume came because of more “distressed sales,'' the Los Angeles-based group said.

In New York, New Jersey, Long Island and parts of Pennsylvania, where the median estimated home value is $418,500 and APRs have risen from 5.9 percent to 6.5 percent, today's buyers can expect to pay $1,656 more a year while home values for the region have dropped about 1.4 percent.

The price of condominiums and co-operative apartments in Manhattan are an exception, with the median increasing 13.2 percent to a record $945,000 in the first quarter, according to an April 2 report by New York-based real estate appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate.

Jumbo Pain

Buyers in markets including New York and coastal California, where more than half of all homes cost more than $417,000, are feeling the most pain. Jumbo loan rates have risen from about 7 percent to about 7.4 percent over the nine months the Fed has cut rates, according to Bankrate.com.

The cost for 30-year fixed-rate jumbo mortgages has increased more than 2 percentage points since June 2003, according to data from Bankrate.com. Over the past year, the average spread between jumbo and so-called conforming mortgages has been about 93 basis points, or 0.93 percentage point. That gap is now about 111 basis points.

“While it's a buyers market in terms of home prices, that is definitely being mitigated by the cost of financing,'' said Stan Humphries, Zillow's vice president for data and analytics.

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Westar Energy Inc. and BP Alternative Energy North America Inc. will break ground Tuesday on a new wind farm.

The Flat Ridge Wind Farm site is located in Nashville, Kan., about 60 miles southwest of Wichita.

The 100-megawatt project was developed by BP. Westar will own half of the farm and purchase energy from BP, under a purchase power agreement. Flat Ridge is expected to go online by the end of 2008 payday loans.

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Total personal income grew faster in New York during the first quarter of 2008 than anywhere else in the Northeast, according to a new report from the U.S. Bureau of Economic Analysis.

New York’s total personal income (TPI) equaled $950.8 billion in the first quarter, which was up 2.5 percent from the fourth quarter figure of $927.4 billion.

No other Northeastern state experienced income growth of more than 1.4 percent. New York, in fact, outperformed all other states but North Dakota and South Dakota. The former led the nation with a TPI increase of 7.6 percent between the fourth quarter of 2007 and first quarter of 2008.

TPI is the measure of all money earned by all residents of a state during a given year. It covers wages, interest, dividends, rental receipts and Social Security payments, among other sources.

Wall Street was largely responsible for New York’s sharp rise in TPI pay day loan.

"Sizable performance bonuses for 2007 in the finance industry accounted for New York’s strong personal income growth, more than double national nonfarm growth," said the Bureau of Economic Analysis report. "Because many of the recipients of the bonuses live in Connecticut and New Jersey, personal income of those states was boosted slightly as well."

The large rises in the Dakotas were caused by strong upswings in prices for grain, especially corn.

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Mexico's central bank unexpectedly raised its benchmark interest rate, ignoring suggestions by President Felipe Calderon that borrowing costs were too high.

The decision to raise the rate a quarter percentage point to 7.75 percent signals the bank doubts Calderon's measures to freeze some food prices will do enough to reduce prices. Mexico joins Chile, Brazil, Vietnam, Turkey and banks around the world in raising rates to fight inflation driven by food and energy.

“They have to be on the inflation case,'' said Alberto Ramos, senior economist for Latin America at Goldman Sachs Group Inc. “Now they have to concentrate on the fuel and food supply shocks that have intensified.''

Banco de Mexico's five-member board surprised analysts surveyed by Bloomberg. Only eight of 26 economists forecast a rate increase, while the rest predicted rates wouldn't change.

Mexico's peso strengthened to a five-year high, climbing 0.3 percent to 10.2794 per dollar. Bonds rose as investors gained confidence that the central bank will manage to curb inflation, helping preserve the value of debt's fixed payments.

Calderon urged the central bank on June 4 to take into account the spread, or difference, in benchmark interest rates between Mexico and the U.S. when setting monetary policy and said he hoped businesses can have access to “cheap credit.'' Higher relative rates can strengthen the peso, hurting exporters such as auto-parts factories and the manufacturing centers on the country's border with the U.S.

Calderon Price Accord

Domestic prices for some goods are likely to rise to reflect international prices, the bank said in a statement, even as industry groups agreed with Calderon this week to freeze prices of 160 food items including canned tuna, tortillas and juices. The president said the accord would fight inflation and ensure Mexico's poorest families can afford food.

By pressuring the central bank and helping freeze food prices, Calderon is balancing economic management with heading off a potential challenge from the left in 2009 congressional elections, said Francisco Gonzalez, professor of Latin American studies at Johns Hopkins University in Washington.

“Calderon is first and foremost a shrewd politician,'' Gonzalez said. “He wants to make things better for the average voter.''

Calderon has also tried to fight higher food prices by removing import tariffs on corn, wheat, rice and beans in May. He eliminated import taxes on nitrogen-based fertilizer, and cut in half the tax on imported powdered milk.

“The recent inflation dynamic is worrying,'' the bank said in a statement on its Web site. “The balance of risks for inflation has worsened.''

Inflation Rate

Mexican consumer prices rose 4.95 percent last month from a year earlier, the most since December 2004, driven by food, housing and air transportation costs online payday loan. The bank forecasts inflation of 4.5 percent to 5 percent in the second and third quarters, as high as 4.75 percent in the fourth quarter and as much as 4.25 percent in the first quarter of 2009.

Banco de Mexico's decision follows similar moves by other central banks in Latin America and elsewhere. Brazil raised rates by half a percentage point at each of its past two meetings and Colombia has held its rate at a six-year high to fight inflation, ignoring calls by President Alvaro Uribe for a cut.

Chile's central bank raised its benchmark interest rate more than economists forecast on June 10 to help contain the fastest inflation in more than 13 years. Vietnam, Philippines, Indonesia, China and Turkey have also raised in the past month.

Rate Outlook

Banco de Mexico may raise the key lending rate again by a quarter percentage point toward the end of its summer if inflation continues to exceed forecasts, Rafael de la Fuente, senior economist for Latin America at BNP Paribas in New York, said in an e-mailed report. De la Fuente correctly forecast the rate increase today.

“Did they explicitly bless the idea of another rate hike? No,'' said Gray Newman, chief Latin America economist at Morgan Stanley in New York, who also predicted today's decision. “But they certainly aren't ruling it out either.''

The central bank is likely to increase its inflation forecast again after it already raised its projection less than two months ago, Newman said.

Mexico's benchmark Bolsa index extended losses, falling as much as 2.2 percent to 29,179.76 when the rate increase was announced. Stocks recovered, remaining 0.6 percent lower for the day at 29,668.94 as of 1:26 p.m. in New York.

The bank said in its statement that it expects second- quarter economic growth similar to the first quarter, when the economy expanded 2.6 percent. It also said the risk of lower growth continued as the U.S. economy slows.

Inflation Expectations

The higher rates will help anchor inflation expectations and help reduce long-term interest rates, Deputy Finance Minister Alejandro Werner said today in Mexico City. He said that the government respects the bank's independence.

Julio Garcia, head of investment banking for Banco Bilbao Vizcaya Argentaria's Mexico unit, said the bank's decision wasn't a response to Calderon's hints that rates were already too high.

“It's the governor of the Bank of Mexico doing his job,'' Garcia said in an interview. “It shows the independence of the Banco de Mexico and its concern for the inflation situation.''

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Retail stores nationwide will be cutting prices on food and beverages to cushion the financial pain of soaring gasoline prices, according to the National Retail Federation.

The Washington D.C.-based trade organization’s survey showed almost 60 percent of consumer respondents said spiraling fuel prices will exercise a downward effect on their holiday spending.

Only 42 percent said the same thing in a survey a year ago.

"Americans will continue to commemorate Independence Day this year, though higher gas prices will impact how they celebrate," NRF President and CEO Tracy Mullin says in a statement. "Retailers are aware of the strain gas prices have on consumers’ wallets and will be offering special promotions on food and beverages for the millions of people planning summer barbecues."

That may help the 61 percent of survey respondents who said they plan to barbecue or attend a cookout during the holiday instant payday loan. Forty percent said they will go to a fireworks display, 10 percent will view a parade and 11 percent say they will take a vacation.

"A traditional Fourth of July trip to the beach or amusement park will be more expensive than it has ever been," says Phil Rist, vice president of strategy at BIGresearch, which conducted the survey of 8,351 consumers from June 3 to 10. "Instead of making elaborate travel plans, many consumers will choose to spend the holiday closer to home with family and friends."

www.nrf.com

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European Central Bank Vice President Lucas Papademos said accelerating wage growth is another sign that faster inflation may be feeding into the euro-area economy.

Labor costs rose 3.3 percent in the 15 countries that share the euro in the first three months of the year, the most since 2003, the European Union's statistics agency reported June 13. Economists had predicted wages to repeat the previous quarter's 2.9 percent increase.

“It doesn't necessarily imply second-round effects are materializing, but is indicative of intensifying domestic inflation pressures,'' Papademos said in an interview at a conference of European and Asian finance officials in Jeju, South Korea.

ECB President Jean-Claude Trichet on June 5 said the bank may raise its benchmark interest rate by a quarter-point to 4.25 percent in July to curb inflation, which is running at the fastest pace in 16 years. ECB policy makers last week moved to damp market speculation that the bank would embark on a flurry of hikes.

“We are not talking about a series of rate increases,'' ECB Executive Board member Juergen Stark said in an interview published June 11. Still, the ECB “will do everything that is necessary to anchor inflation expectations and to deliver price stability in the medium term,'' Stark said.

Protracted Inflation

In a presentation to the conference, Papademos said that with inflation rising 3.6 percent in May it is likely to “remain above 3 percent for a protracted period of time'' before moderating payday loans online. The medium-term outlook for prices is subject to “upside risks,'' he said.

Second-round inflation occurs when consumers and companies seek compensation for higher food and fuel costs by pushing up salaries and their own prices, leading domestic inflation to spiral higher and risk becoming embedded in the economy.

Deutsche Post AG, Europe's biggest postal service, and Germany's Ver.di labor union in April agreed to a 4 percent pay increase effective Nov. 1 for 130,000 employees and another 3 percent raise starting in December 2009. Dutch wages increased more in the first quarter than in the whole of last year, the national statistics bureau said April 7.

Inflation expectations in the 15-nation euro region have started to rise. The so-called breakeven on five-year French inflation-indexed bonds was at 2.45 percent on July 13, up from 2.12 percent in March.

ECB Forecasts

The ECB, which aims to keep average annual price gains just below 2 percent, on June 5 raised its inflation forecasts to about 3.4 percent for this year and 2.4 percent for 2009.

At the same time, the ECB forecast economic growth will slow to 1.8 percent this year and 1.5 percent next year from 2.6 percent in 2007.

Investors expect the ECB to raise its key rate twice to 4.5 percent this year, according to Eonia forward contracts.

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Applera Corp.’s Applied Biosystems Group is the target of a $6.7 billion acquisition offer by Invitrogen Corp., the company said Thursday.

The offer, in cash and stock, would create a global leader in biotechnology research tools and supplies, with an estimated $3.5 billion in combined sales, the companies said.

The boards of directors of both companies have approved the agreement. If closed, the combination would create Applied Biosystems Inc., which would have its corporate headquarters in Carlsbad.

Applied Biosystems (NYSE: ABI), is based in Foster City and maintains a campus in Pleasanton as well fast cash advance. Invitrogen is based in Carlsbad.

The transaction is expected to close by fall 2008, subject to regulatory approvals and the completion of Applera’s Celera group — its Alameda operating group — splitting off from the company, which is due expected to occur July 1.

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Sales at U.S. retailers probably rose in May as Americans started spending their tax-rebate checks, and record gasoline prices inflated receipts at service stations, economists said before a report today.

Purchases rose 0.5 percent, following a 0.2 percent drop the prior month, according to the median estimate in a Bloomberg News survey before the Commerce Department's report. Figures from the Labor Department may show the cost of imported goods surged 2.5 percent last month, led by climbing fuel expenses.

Wal-Mart Stores Inc. is among retailers benefiting from about $50 billion in stimulus checks the government sent out through May as the increase in prices drove consumers to discount chains. The boost may be short-lived as tighter credit, plummeting property values and a weakening labor market signal Americans will retrench once the extra cash is spent.

“The rebates should provide some boost to consumer spending, but the stimulus checks won't provide the economic lift policy makers had hoped for,'' said Ryan Sweet, an economist at Moody's Economy.com in West Chester, Pennsylvania. “The surge in gasoline prices is diluting the benefit.''

The Commerce Department's report is due at 8:30 a.m. in Washington. Forecasts ranged from a decline of 0.3 percent to a 1.2 percent gain. Excluding autos, sales probably rose 0.7 percent, the most since November, according to the survey.

The Labor Department's figures on import prices, due at the same time, will probably show costs accelerated after a 1.8 percent increase in April. Predictions ranged from gains of 0.5 percent to 4 percent.

$4 Gasoline

The cost of gasoline has risen 33 percent so far this year, reaching a record exceeding $4 a gallon this week for regular unleaded, according to AAA. Food prices have also surged, prompting shoppers to hunt for bargains at discounters payday loans in one hour.

Wal-Mart, the world's largest retailer, had a 3.9 percent jump in same-store sales last month as consumers bought cut-rate staples and took advantage of promotions linked to the tax rebates.

“Many of our customers need to live from paycheck to paycheck,'' Wal-Mart Chief Financial Officer Thomas Schoewe told reporters last week. “The amount they're spending on basics is a big portion of the total basket.''

Consumers cashed $350 million in rebate checks at Wal-Mart stores, Schoewe said. The retailer doesn't know how much of that was spent at the chain.

Rebates Spent

Households will spend about $90 billion more this year on gasoline if prices remain around current levels, according to a forecast by economists at Credit Suisse Holdings in New York. That will consume about 80 percent of the more than $110 billion in rebate checks the government will eventually send out.

“Consumers should start to respond to the additional cash by increasing spending,'' said Michael Hanson, an economist at Lehman Brothers Holdings Inc. in New York. “The rebate will act like a shot of caffeine,'' even as the effects “will be temporary.''

Consumers aren't buying big-ticket items such as automobiles, reflecting slumping confidence and weakening household finances. Cars and light trucks sold at a 14.3 million annual pace in May, the fewest since July 1998, according to industry data.

Spending may grow at an annual rate of 0.8 percent this quarter, down from a 1 percent pace in the prior quarter and the weakest since the first three months of 1995, according to the median estimate of economists surveyed by Bloomberg News this month.

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